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S&P/ASX 200 wobbles on tough resources outlook

Credit: Simon Cunningham

What: Thursday’s trading session on the ASX saw renewed selling pressure after a weak lead from Wall Street. By yesterday’s close, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) had lost 0.8% and closed at 5,038.

The recent declines mark the seventh time since August that the market has flirted with the 5,000-point level and it’s a reasonable question to ponder whether this time the market may not hold around this level, but rather make a break lower and head towards 4,500. If it does trend lower, it will take the index back to a level last seen in 2012 and 2013!

So What: While the resource and energy sector can certainly be singled out for blame as driving the pull back in the market – resource majors BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) have crashed by over 39% and 25% respectively in the past six months, while energy giant Woodside Petroleum Limited (ASX: WPL) is also plumbing fresh 52-week lows and down 26% since early June. There are also plenty of other stocks which are acting as a drag on the market.

Given the following stocks aren’t exposed to the resource or energy sectors, which for many investors are considered avoid at all costs, they may offer value buying opportunities.

Here are some well-known stocks which have recently hit new 52-week lows…

  • Argo Investments Limited (ASX: ARG) – new low of $7.48
  • Primary Health Care Limited (ASX: PRY) – new low of $2.93
  • Greencross Limited (ASX: GXL) – new low of $4.64
  • SMS Management & Technology Limited (ASX: SMX) – new low of $2.95

Now What: Last night on Wall Street the Dow Jones rebounded 0.5%, while the broader S&P 500 finished 0.2% higher. This positive lead has helped the ASX gain 0.4% in late morning trade but the index still remains well below 5,100.

While it should be remembered that investing is best practiced as a long-term pursuit, portfolio allocation plays an important part in a successful investment strategy. Finding the right balance between holding cash and snapping up bargains can help achieve outperformance.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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